ILWU Slowdowns Lead to Temporary Suspension of Vessel Operations on Four Weekend, Holiday Dates Yard, Gate and Rail Operations Will Continue on “Premium Pay” Work Dates

In light of ongoing and costly ILWU slowdowns, PMA members will temporarily suspend premium-pay weekend and holiday vessel operations on four upcoming dates, while yard, gate and rail operations will continue at terminal operators’ discretion. In Southern California, terminal operators will expand daytime vessel operations on non-holiday weekdays.

Weekend and holiday pay rates command a premium of at least 50% of the basic longshore wage rate. As a result, working hours on those days would be paid at between $54 and $75 per hour for longshore workers and clerks, and between $77 and $92 per hour for foremen. PMA members have concluded that they will not conduct vessel operations on those dates, paying full shifts of ILWU workers such high rates for severely diminished productivity while the backlog of cargo at West Coast ports grows.

“Last week, PMA made a comprehensive contract offer designed to bring these talks to conclusion,” said PMA spokesman Wade Gates. “The ILWU responded with demands they knew we could not meet, and continued slowdowns that will soon bring West Coast ports to gridlock. What they’re doing amounts to a strike with pay, and we will reduce the extent to which we pay premium rates for such a strike.”

While the ILWU has claimed that the parties are “this close,” they continue to push demands that would cripple the West Coast waterfront. In particular, the Union is demanding the right to fire any arbitrator who rules against them at the end of each contract period, even though those arbitrators are the referees who keep West Coast ports operating smoothly. During the 2008 – 2014 contract period, the four area arbitrators found the ILWU guilty of more than 200 slowdowns or work stoppages.

“The ILWU’s current slowdowns, now in their fourth month, show the very reason that we need a healthy arbitration system in place,” Gates said. “It is essential to be able to prevent the crippling slowdowns that are impacting workers and businesses across the nation.”

Last week, after nine months of contract talks, PMA last week made a comprehensive contract offer that would raise ILWU wages by 14 percent over five-years, on top of current average full-time wages of $147,000 per year. It would maintain fully employer-paid health care, worth $35,000 per year, and increase the ILWU pension to as much as $88,800 per year. The pay guarantee program would ensure that longshore workers are paid for 40 hours per week, even if no work is available, and the ILWU would have jurisdiction over the maintenance and repair of truck chassis.

Hanjin confirms it will leave Portland following two years of labor (JoC)

Hanjin Shipping Co. said on Wednesday in Asia that it was withdrawing direct service to the Port of Portland, Oregon, after a 2 1/2-year-old dispute with longshoremen that severely undermined productivity.

"Hanjin Shipping has decided to pull out of the Port of Porland effective from March 9," the company said in a statement issued on Wednesday morning Asia time. "However, we will continue to provide services to/from Portland, Oregon, and nearby regions via rail and truck transportation to/from Seattle. We will still accept bookings to/from Portland destination and origin."

Longshoremen in Portland had resumed work Tuesday on a Hanjin Shipping Co. vessel that had been idled for four days during the most recent of many labor dispute since 2012, but a newly arrived vessel operated by Westwood Shipping was not being worked.

Canadian intermodal shippers could see a reduction in Canadian Pacific Railway service if a union representing 3,300 locomotive engineers, conductors and train workers follow through with their threat to strike later this week if the railroad doesn’t meet their contract demands.

Teamsters Canada Rail Conference-Running Trades on Tuesday gave the railroad official notice of its intention to strike as soon as midnight Feb. 15. If union workers walk off the job, CP said it will implement its contingency of replacing them with “qualified management employees” in order to “maintain a reduced freight service on its Canadian network.” The railroad has been training desk workers and managers to run trains.

The two sides began bargaining on a new contract a year before it expired last December. But talks have broken down over working conditions, namely CP’s refusal to honor collective agreements requiring train crews to rest after 10 straight hours of work, TRPC President Doug Finnson said in a statement. He also accused the railroad of not giving the majority of union members “accurate information on when they are required to work.”

"CP's offers included wage increases, better benefit plans, and the reinstatement of the Employee Share Purchase Plan in a long-term agreement," Peter Edwards, the railroad’s vice president of human resources and labor relations, said in a statement. "We also proposed a model that will improve the scheduling of regular time off and quality of life while enhancing our service and efficiency, but the union has not been interested." CP also said the strike notice violates the union’s commitment to keep working so that grain exporters can get keep moving their shipments.

With the help of the Federal Mediation and Conciliation Services, the two sides are in Montreal trying to work out a deal. If a deal isn’t reached, Ottawa will likely pass back-to-work legislation, as legislators took that approach in 2012 when Teamsters Canada Rail Conference workers struck for nine days, Wayne Benedict, a labor lawyer and former railroad worker, told CBC News. But CP still suffered a hefty backlog of cargo before the back-to-work legislation took effect.

PMA releases data to show how terminals are being denied skilled labor (JoC)

The Pacific Maritime Association on Friday answered a public relations blitz by the International Longshore and Warehouse Union by releasing statistics that show that over the past two months the union has reduced by two-thirds the number of skilled equipment operators being dispatched each day at the ports of Los Angeles and Long Beach.

The statistics show the ILWU since Nov. 3 has reduced from 110 to 35 the number of skilled equipment operators that are dispatched each day from the union hall to work in the marine terminal container yards. As a result, almost instant gridlock developed at most of the 13 container terminals in the port complex. Cargo interests complain that container dwell time at the busiest U.S. port complex has more than doubled since early November.

Equipment operators use yard cranes to move containers from the stacks in the maine terminals to truckers for delivery to local rail yards and distribution centers. As soon as the ILWU on Nov. 3 told employers in a letter it would withhold equipment operators for safety reasons, “tens of thousands of containers” that should have been turned over to truckers each day ended up sitting on the docks, adding to congestion that had already been building there in recent months, PMA spokesman Wade Gates said on Friday.

The PMA charged that the ILWU slashed the number of skilled equipment operators in order to pressure employers at the coastwise level to make concessions when contract negotiations began to stall in late October. The negotiations had been underway since May, and the ILWU has been working without a contract since the previous contract expired on July 1.

The PMA on Friday released the numbers on the withholding of equipment operators after the ILWU initiated a media effort on New Year’s Day. ILWU Local 13 followed on Friday afternoon, Jan. 2, with a press conference before the night shift began protesting a decision by the employer group to reduce the longshore crews that would be assigned to work vessels on the night shifts from three per vessel to one.

In a statement late Friday, Local 13 spokesman Adan Ortega said U.S. Rep. Janice Hahn and several local and state political leaders attended the press event along with 800 longshoremen who were ready to report to work.

The PMA had notified the union on New Year’s Eve that Southern California employers on the night shifts would order only one 45-man crew, or gang, as it is called, per vessel because the yards were being choked with containers. Yard and gate operations on the night shift would be manned as usual, and vessel operations on the day shifts would also be manned as usual, the PMA stated. Gates maintained that “it makes no sense” to unload containers at a rapid rate from vessels when the yards are already choked with containers and there is no room for the additional boxes. Terminals intend to call full gangs to work the yards and gates each night in order to make room for containers being unloaded from the vessels, he said.

ILWU Local 13 President Bobby Olvera said on Friday that the employers’ one-gang policy was irresponsible, and that it would now take eight to 10 days to unload a vessel, rather than the two and one-half days that it should take. Employers met with union officials Friday morning to convince them to return to the normal dispatching of more than 100 skilled equipment operators each day, but the union reportedly refused.

The PMA also explained exactly how the ILWU is withholding skilled equipment operators. Longshoremen receive special training to operate yard cranes. After sufficient experience is gained, those workers are “certified” to operate the cranes. However, dozens of longshoremen that have undergone training for some time are also judged to be “qualified” to operate the cranes even before they are certified.

According to a process that has been in effect since 1999, the PMA places orders for yard crane operators, and the ILWU hall dispatches the operators. At Los Angeles-Long Beach, the ILWU normally dispatches a mix of 110 certified and qualified crane operators each day. However, the ILWU on Nov. 3 notified PMA that it would only dispatch 35 certified crane operators each day, Gates said.

The ILWU has pointed to the fact that the Southern California ports have been congested for months due to operational issues tied to big ships which have been discharging 5,000 to as many as 10,000 containers during each vessel call, far higher than a few years ago when smaller ships called the LA-Long Beach ports. The union also points to a shortage of chassis as a major cause of congestion.

Gates said that by making such claims, ILWU leaders are misdirecting the public away from their unilateral decision to withhold the skilled labor that is necessary to keep the marine terminals fluid.

The ILWU charged that employers have brought the congestion problems upon themselves by neglecting training programs for crane operators at a time when ships are getting bigger and cargo surges from the vessels are increasing. The ILWU also charged that carriers started the chassis problems in the harbor earlier this year by selling chassis to third-party lessors and then failing to maintain the chassis.

The maintenance and repair of chassis is one of the issues that is reportedly preventing an agreement on a new contract. The chassis-leasing companies are not members of the PMA and therefore are not bound by the PMA’s contract with the ILWU. The union fears that it will lose hundreds of jobs on the West Coast performing M&R on chassis.

Report sees cargo growth, shift from West Coast (JoC)

February imports through top U.S. container gateways are expected to rise 10.1 percent year-over-year despite West Coast congestion that has stalled shipments and shifted cargo to the East Coast, according to the monthly Global Port Tracker.

“East Coast ports have been the beneficiaries of the labor disputes on the West Coast,” said Ben Hackett, founder of Hackett Associates, which produces Port Tracker for the National Retail Federation. “We have to admit that we underestimated the level of the switch.”

“With cargo volume growing as the economy continues to recover, the last thing we need is a port shutdown that would bring billions of dollars of economic activity to a halt,” said Jonathan Gold, NRF vice president for supply chain and customs policy.

Unrest surrounding West Coast labor talks has coincided with strong import volume driven by a strengthening U.S. economy. West Coast ports’ third-quarter volume was the highest in five years, the report said. East Coast ports have benefited from West Coast problems, but Hackett said much of the rerouted cargo will return to revert to normal routing once congestion eases.

“Remember that it is still cheaper to ship to West Coast ports rather than via the all-water route,” he wrote in the report. Ports covered by Global Port Tracker handled 1.44 million 20-foot-equivalent units in December, the latest month for which after-the-fact numbers are available. That was up 9.3 percent from December 2013. Full-year volume for 2014 was 17.3 million TEUs, up 6.6 percent from 2013. Of the 10 major import gateways tracked by Port Tracker, only Seattle showed a decline.

January volume was estimated at 1.48 million TEUs, up 7.5 percent. Continued strong growth is forecast this year: February, 1.37 million TEU, up 10.1 percent; March, 1.34 million TEUs, up 3 percent; April, 1.49 million TEUs, up 4.3 percent; May, 1.56 million TEUs, up 4.9 percent, and June, 1.56 percent, up 5.3 percent.

Those numbers, modeled on the assumption West Coast ports aren’t closed by a lockout, would bring the first half of 2015 to 8.8 million TEUs, an increase of 5.8 percent over the first six months of 2014. Hackett

The Port Tracker report covers the ports of Los Angeles/Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Virginia, Charleston, Savannah, Port Everglades and Miami on the East Coast, and Houston on the Gulf Coast.

Lunar New Year effect keeps foreign trade up at China ports (JoC)

Foreign trade helped to drive up container volumes at China’s top seven ports in January as a late rush for Chinese New Year shipments saw year-over-year throughput growth of 5.3 percent. A total of 10.4 million TEUs were handled by the seven major ports tracked by Citi Research, with 8.4 million of the 20-foot containers classified as foreign trade, a 5 percent increase compared to January last year.

The Yangtze River Delta (YRD) led the way in January, with almost 5 million TEUs crossing the wharves of ports in the central coastal region. It was a solid 7.5 percent increase on January last year, with Ningbo the main driver as its volumes increased 11.1 percent year-over-year to 1.82 million TEUs.

Shanghai contributed more than two-thirds of the YRD volumes, and although its throughput was slightly down over December’s, China’s busiest port saw foreign trade increasing 4.7 percent on a throughput growth of 5.6 percent year-over-year.

Domestic trade growth in the YRD remained strong at 22.6 percent year-over-year, against December’s 14.9 percent, with foreign trade up a decent 6.2 percent, Citi reported in a note to customers.

It was a different picture in the Pearl River Delta (PRD), where a strong finish to 2014 became a slow January as ports in the South China region recorded 3.2 percent year-over-year growth against a 10.1 percent increase in volumes during December.

A total of 3.22 million TEUs were handled in the PRD in January, with Guangzhou (that includes the Maersk gateway of Nansha) growing almost 10 percent compared to the same month last year. The port of Xiamen hit a growth of 12 percent in January, handling 580,000 TEUs during the month.

Foreign trade was little help to the Bohai Rim ports in North China, remaining flat compared to January last year, while domestic trade grew 2.1 percent as the container volumes hit 1.62 million TEUs, Citi Research noted.

Tianjin grew relatively faster at 1.3 percent, mainly supported by domestic trade as Tianjin’s foreign trade declined by 0.4 percent year-over-year, while Dalian recorded a slim growth of 0.4 percent compared to January last year.

Citi Research analysts expect the February throughput growth to pick up with the Chinese New Year rush shipments and on comparisons with the low base from the previous year.

“Looking ahead, the recent disappointing PMI number (with export order index only at 48.4) might indicate some weakness in the following months after CNY,” the Citi note said. “We maintain our forecast that foreign trade will grow by 6-7 percent with the possible improvement from EU supported by accommodative monetary policies.”

West Coast port backlog could take weeks to unwind (American Shipper)

Major shipper and railroad told a Senate panel about the harmful impact of work slowdowns at West Coast ports. It will take weeks, even months, for supply chains to get back to normal once the longshoremen's labor dispute crippling West Coast port operations ends, representatives for a major agriculture shipper and freight railroad testified Tuesday on Capitol Hill.

Importers and exporters are complaining loudly that they are being caught in the middle of the contract dispute between the Pacific Maritime Association and International Longshore and Warehouse Union, paying a heavy price in delayed shipments and extra transportation costs and fees, as both sides try to gain leverage by reducing work levels at the ports. Container ports along the West Coast are struggling with the overflow of containers and vessels waiting at anchor. Negotiations between PMA and the ILWU were expected to resume today. They had last met on Friday, Feb. 6.

Our best estimate is on chilled shipments it will take at least a month to get back into a normal flow,” while it could take three to four months to unwind the backlog of frozen meat shipments, Norman Bessac, vice president of international sales for pork at agricultural services conglomerate Cargill, told the Senate Commerce, Science and Transportation subcommittee on surface transportation and merchant marine infrastructure, safety and security.

The recovery time continues will continue to increase every day the artificially generated congestion remains, he added. It will take several weeks for BNSF Railway, which handles more international cargo than any other U.S. railroad, to retrieve locomotives stored across its western network and reposition them at the ports, said Katie Farmer, vice president of consumer products for BNSF.

Farmer said the upcoming Chinese New Year, which will result in fewer vessel arrivals as factories shut down production for up to two weeks or more, offers an opportunity for the freight transportation system “to work off the backlog at the ports” if the labor crisis is averted.

And the situation could get worse before it gets better. The hearing featured handwringing by lawmakers and businesses over the labor dispute at West Coast ports that has resulted in massive cargo delays and economic dislocation, but participants agreed that once the situation is solved, industry and government need to address the pre-existing conditions for congestion at major container ports and long-term infrastructure challenges for intermodal freight.

Productivity at the ports of Los Angeles, Long Beach, Oakland, Seattle and Tacoma has fallen by 50 percent in recent months as negotiations between the ILWU and waterfront employers, represented by the PMA, have deteriorated into finger pointing for the lack of a deal. The union instituted a work slowdown in November that has severely constrained vessel, truck and rail operations, and caused container yards to overflow with unclaimed cargo. Terminal operators have responded by eliminating some night and weekend shifts to save having to pay labor costs for a fraction of the normal work. The situation has gotten so bad that terminal operators are threatening to lockout longshoremen and shut down the ports altogether.

Senators from inland states said their constituents were being harmed by the port problems. Almost 13 percent of U.S. Gross Domestic Product is tied to goods moving through West Coast ports.

Conductix Wampfler, a French-owned company with two plants in Omaha that makes electric conductors for industrial applications with components from Asia, has seen its import times double and costs triple because of the slowdown, according to subcommittee Chairman Deb Fischer, a Republican from Nebraska.

Freshman Sen. Steve Daines, R-Montana, said an outdoor products manufacturer in his state could soon be forced to scale back hiring plans and potentially lay off some personnel if there is no resolution to allow cargo to flow faster.

Commerce Committee Chairman John Thune, R-S.D., said giant meat producer Tyson Foods, which has offices and plants in South Dakota, is storing beef and pork in refrigerated warehouses near the ports waiting to get on vessels to Asia. He also said that Outdoor Gear Inc., a family-owned wholesaler that receives 95 percent of its inventory through West Coast ports, has been forced to miss deadlines, pay late delivery penalties and pass up important sales opportunities.

Meat suppliers are losing sales because of the delays at ports and the uncertainty that products will be delivered before their freshness expires, Bessac testified. Fresh beef and pork have shelf lives of 60 and 45 days, respectively. Under normal circumstances a container of pork can be shipped to Asian buyers, including trucking and customers clearance, in 20 days. Shipments are now taking two to three weeks just to get off the docks because of the port congestion.

With this delay, our Asian customers cannot count on a dependable supply of U.S. beef and pork, so they have started to cancel orders and are looking to suppliers in Chile, Australia and the European Union to meet their needs,” Bessac said.

Japanese customers notified Cargill Monday that they would start canceling next week’s orders for chilled pork shipments because of concerns the meat will have no shelf life by the time it arrives. The shipment of about 15 containers is worth an estimated $1 million.

The North American Meat Institute conservatively estimates that West Coast port situation is costing meat and poultry companies $40 million per week, in addition to initial losses in excess of $50 million. The U.S. Hides, Skins and Leather Association reports losses in sales of $45 million per week. And the U.S. Forage Export Council says hay and forage growers are losing $266,000 each day.

In January alone, cherry growers in Oregon lost more than $250,000 of export sales directly related to port disruption, according to a news release from the Agriculture Transportation Coalition.

The situation leaves shippers with three choices, Bessac said: continue to ship despite the uncertainty, which can result in shorter shelf life, increased risk of spoilage and even complete product loss; airfreight products at three to five times the normal cost; or scale-back production and stop exporting.

Shippers say they face rising transportation costs for switching to airfreight, cold storage waiting for vessels, container plug-in charges, truck wait times, dry truck runs, chassis usage charges, congestion surcharges imposed by ocean lines and rent for containers that are not picked up or returned within an allotted window of days.

Bessac said Cargill, which ships more than 1,000 containers a month through West Coast ports, has experienced a ‍ substantial decline in our volumes” during the last couple months, and to a lesser degree all last year, because of congestion and the growing strength of the U.S. dollar, which makes American products more expensive overseas.

Exporters say the situation is doubly worrisome because it may be difficult to win back customers once they have changed to suppliers in other nations that can provide more efficient and reliable transportation. Any time you disappoint a customer, it takes a long time to build trust back,” Bessac said.

The loss of productivity at West Coast ports due to the ILWU-PMA negotiations has forced BNSF to cut its eastbound train moves in half to 30 per week because there is not enough freight to move in unit trains, BNSF Railways’ Farmer said. When we do that it sits on the mainline and causes ripple effects across our network, which impacts other customers in addition to our intermodal customers,” she said.

Each missed train carries a minimum of 250 containers that are not going to retailers and manufacturers. The railroad then has to turn away freight at inland hubs because it doesn’t have enough trains and containers for outbound transportation back to the ports.

Farmer and Walter Kemmsies, the chief economist for maritime infrastructure engineering firm Moffat & Nichol, said that once there is labor peace, all sectors must work on structural issues - chassis supply, inland container imbalances, inefficient terminal practices, and declining port trucking capacity, among many - that have contributed to congestion in the face of new ultra-large vessel deployments.

Today’s excruciating slowdown on the West Coast may be the result of contract negotiations, but the impact its having on retailers provides a window into the future as increasing volumes and complexity will create similar backups, delays, higher costs and lost productivity,” the Retail Industry Leaders Association said in written testimony. “These issues will undoubtedly negatively impact employment throughout the supply chain, and put us in a weaker position with many of our trading partners around the globe. Well performing infrastructure and an efficient supply chain is vital to economic growth in the decades ahead. Now is the time to address the challenges that could disrupt that growth, and prepare ourselves for a future that gives American workers the opportunity to reap the benefits of an expanding global economy.”

There is little Congress can do about a labor dispute between private parties, but several speakers said Congress needs to do a better job of infrastructure investment to move goods and people more efficiently. Sen. Richard Blumenthal, D-Conn., said his state needs to upgrade rail lines to accommodate 287,000-pound rail cars that are the standard in North America, or it will become a “freight island” that can’t connect with the rest of the rail network.

That’s just one example of how clogged arteries can stymie economic progress and job creation,” he said.

Congress is gearing up to debate a multi-year surface transportation reauthorization bill that will create the budget for maintenance and expansion of highways, bridges and transit. A key sticking point is declining gas tax revenue to support the Highway Trust Fund to pay for infrastructure upgrades. Disagreement over tax policy and government spending is expected to make any deal difficult.

The Department of Transportation projects that freight volume will increase 45 percent by 2045. As demand grows, both within and outside the United States, the pressure on our goods movement network significantly increases, this growth and the economic value it brings to our economy will be stunted if investment in our freight system is left to wither,” John Greuling, president of the Will County Center for Economic Development in Illinois, said.

Testifying on behalf of the Coalition for America’s Gateways and Trade Corridors, he added emphasized that investment must be strategic and multimodal, to include locks and dams on inland waterways; first-and-last-mile connectors between modes, distribution centers and transport hubs; tunnels and grade separation of rail and road crossings.

Another CAGTC policy priority is for Congress to establish a freight fund with a dedicated revenue stream of at least $2 billion per year. The money would be awarded through grants based on measures of economic benefit and performance. The group of 60-plus private and public organizations is also calling for development of a multimodal national freight transportation policy to guide infrastructure planning across states and regions.